hansen technologies limited

Hansen Technologies Limited ABN 90 090 996 455

Interim Financial Report

for the half-year ended 31 December 2019

2 Hansen Technologies Limited 31 December 2019 Half-Year Report

Hansen Technologies Limited

Interim Financial Report for the half-year ended 31 December 2019

Contents Page Number

Directors’ Report.......................................................................................................................................................... 3

Auditor's Independence Declaration ............................................................................................................................. 5

Consolidated Statement of Comprehensive Income ...................................................................................................... 6

Consolidated Statement of Financial Position ............................................................................................................... 7

Consolidated Statement of Changes in Equity .............................................................................................................. 8

Consolidated Statement of Cash Flows ........................................................................................................................ 9

Notes to the Financial Statements ...............................................................................................................................10

Directors’ Declaration..................................................................................................................................................20

Independent Auditor's Review Report ..........................................................................................................................21


Directors’ Report

The Directors present their report together with the half-year financial report of the consolidated entity (“the Group”) consisting of Hansen Technologies Limited (“the Company”) and its controlled entities for the six months ended 31 December 2019, and the Independent Auditor’s Review Report thereon. This half-year financial report has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

Principal activities

The principal activities of the Group were the development, integration and support of billing systems software for the utilities, energy, pay-TV and telecommunications sectors. Other activities undertaken by the Group include IT outsourcing services and the development of other specific software applications.

Directors

The names of the Directors in office at any time during the whole of the half-year and up to the date of this report are:

Mr David Trude (Chairperson) Mr Andrew Hansen (CEO and Managing Director) Mr Bruce Adams Ms Jennifer Douglas Mr David Howell Ms Sarah Morgan (Resigned on 19 December 2019) Mr David Osborne Mr Don Rankin (Appointed on 21 November 2019)

Review of Operations

The Group’s operating result for the half year to 31 December 2019 comprised of the following:

6 months ended 31 Dec

31 Dec 2019 A$ millions

31 Dec 2018 A$ millions

Movement %

Operating revenue 144.3 112.4 ▲ 28.4%

Underlying EBITDA excluding AASB 16 impact1, 2, 4, 5 34.1 28.5 ▲ 19.6%

Underlying NPAT4, 5 9.3 12.9 ▼ 27.9% Underlying NPATA1,3, 5 18.2 17.7 ▲ 2.8%

Basic earnings per share (EPS) (cents) 3.8 cents 6.6 cents ▼ 42.4% Basic EPS based on underlying NPATA (EPSa) (cents)1 9.2 cents 9.0 cents ▲ 2.2%

1. The Directors believe the information additional to IFRS measures included in the report is relevant and useful in measuring the financial performance of the Group. These include: EBITDA, NPATA and EPSa.

2. EBITDA is a non-IFRS term, defined as earnings before interest, tax, depreciation and amortisation, and excluding net foreign exchange gains (losses).

3. NPATA is a non-IFRS term, defined as net profit after tax, excluding tax-effected amortisation of acquired intangibles and impact of the adoption of AASB 16 Leases (AASB 16).

4. Underlying EBITDA, underlying NPAT and underlying NPATA exclude separately disclosed items, which represent the restructuring and one-off costs associated with the Sigma acquisition. Further details of the separately disclosed items are outlined in Note 4 to the Financial Report.

5. On 1 July 2019, the Group adopted AASB 16 for the first time. Prior half-year numbers have not been restated. Further details on the adoption of AASB 16 are described in Note 2 to Financial Report on page 10.

The Group’s revenue for the first half of the financial year was higher than the previous corresponding period as a result of the acquisition of Sigma Systems business (Sigma) on 1 June 2019.

Continued investment in Sales and Marketing has increased Hansen’s profile in target markets and further reinforced the Group’s long-term customer relationships.

Investment in our global infrastructure and products has continued throughout the period ensuring our business remains scalable and appropriately poised for growth.

The Group has generated operating cash flows of $18.2 million, which has been used to retire net external debt of $8.0 million, fund capital expenditure of $10.0 million, reduce lease liabilities of $3.4 million and pay dividends of $4.9 million (net of dividend reinvestments). With the Group’s cash generation capabilities, Hansen is well placed to service and retire its debts over the coming years.

The Directors of Hansen have declared a consistent 3 cents per share interim dividend, partially franked to 1.59 cents.


Significant Changes in the State of Affairs

There have been no significant changes in the Group's state of affairs during the half-year.

Auditor's Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation to the review for the half-year is provided with this report.

Rounding of Amounts to Nearest Thousand Dollars

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’ report and in the financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar (where indicated).

Signed in accordance with a resolution of the Directors, pursuant to section 306(3)(a) of the Corporations Act 2001:

David Trude Andrew Hansen

Director Director

Dated: 28 February 2020

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of Hansen Technologies Ltd and Controlled Entities for the half year ended 31 December 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

RSM AUSTRALIA PARTNERS

J S CROALL Partner

Dated: 28 February 2020 Melbourne, Victoria

5

The accompanying notes on pages 10 to 19 form part of these consolidated financial statements.


Consolidated Statement of Comprehensive Income For the Half-Year Ended 31 December 2019

Dec-19 Dec-18

Note $'000 $'000

Operating revenue from contracts with customers 3, 5 144,331 112,436

Other income 1,200 1,492

Total revenue from contracts with customers and other income 145,531 113,928

Employee benefit expenses (78,694) (61,602)

Amortisation expense 6 (15,292) (9,179)

Depreciation expense (5,486) (1,924)

Property and operating rental expenses (2,218) (4,741)

Contractor and consultant expenses (4,860) (2,770)

Software licence expenses (1,121) (1,090)

Hardware and software expenses (7,484) (5,232)

Travel expenses (4,783) (2,620)

Communication expenses (1,730) (1,880)

Professional expenses (3,050) (971)

Finance costs on borrowings (4,363) (645)

Finance costs on lease liabilities (617) -

Foreign exchange (losses)/gains (684) 265

Other expenses (6,060) (4,522)

Total expenses (136,442) (96,911)

Profit before income tax expense 9,089 17,017

Income tax expense (1,480) (4,068)

Net profit after income tax expense for the half-year 7,609 12,949

Other comprehensive income/(expense)

Items that may be reclassified subsequently to profit and loss

Exchange differences on translation of foreign operations (7,640) 1,862

Other comprehensive income/(expense) for the half-year, net of tax (7,640) 1,862

Total comprehensive income/(expense) for the half-year (31) 14,811

Basic earnings (cents) per share attributable to ordinary equity holders of the

Company 3.8 6.6

Diluted earnings (cents) per share attributable to ordinary equity holders of the

Company 3.8 6.5



Consolidated Statement of Financial Position As at 31 December 2019

Dec-19 Jun-19

Note $'000 $'000

Current assets Cash and cash equivalents 29,926 38,288

Receivables 62,437 49,475

Accrued revenue 5(b) 26,383 27,817

Current tax asset 199 -

Other current assets 12,245 7,920

Total current assets 131,190 123,500

Non-current assets Plant, equipment & leasehold improvements 12,085 10,986

Intangible assets 6 389,250 402,782

Right-of-use assets 2 24,092 -

Deferred tax assets 3,538 4,601

Other non-current assets 2,873 3,123

Total non-current assets 431,838 421,492

Total assets 563,028 544,992

Current liabilities Payables 23,140 21,195

Borrowings - 134

Lease liabilities 2 5,732 92

Current tax payable - 1,756

Provisions 14,109 15,070

Unearned revenue 5(b) 34,026 27,069

Total current liabilities 77,007 65,316

Non-current liabilities Deferred tax liabilities 41,291 44,290

Borrowings 8 180,399 186,327

Lease liabilities 2 19,058 -

Provisions 234 189

Total non-current liabilities 240,982 230,806

Total liabilities 317,989 296,122

Net assets 245,039 248,870

Equity Share capital 10 140,117 138,746

Foreign currency translation reserve 15,700 23,340

Share-based payment reserve 7 4,690 3,931

Retained earnings 84,532 82,853

Total equity 245,039 248,870



Consolidated Statement of Changes in Equity For the Half-Year Ended 31 December 2019

Contributed

Equity Reserves

Retained

Earnings

Total

Equity

For the half-year ended 31 December 2019 Note $'000 $'000 $'000 $'000

Balance as at 1 July 2019

138,746

27,271

82,853 248,870

Net profit after income tax expense for the half-year - - 7,609 7,609

Movement in carrying amount of foreign entities due to

currency translation

-

(7,640)

-

(7,640)

Total comprehensive income for the half-year - (7,640) 7,609 (31)

Transactions with owners in their capacity as owners:

Employee share options exercised 10 345 - - 345

Share-based payment expense – performance rights 7 - 759 - 759

Equity issued under dividend reinvestment plan 9, 10 1,026 - - 1,026

Dividends declared 9 - - (5,930) (5,930)

Total transactions with owners in their capacity as

owners 1,371 759 (5,930) (3,800)

Balance as at 31 December 2019 140,117 20,390 84,532 245,039

Contributed

Equity Reserves

Retained

Earnings

Total

Equity

For the half-year ended 31 December 2018 Note $'000 $'000 $'000 $'000

Balance as at 1 July 2018 136,896 19,841 73,186 229,923

Effect of adoption of new accounting standards - - 1,984 1,984

Balance as at 1 July 2018 (restated) 136,896 19,841 75,170 231,907

Net profit after income tax expense for the half-year - - 12,949 12,949

Movement in carrying amount of foreign entities due to

currency translation

-

1,862

-

1,862

Total comprehensive income for the half-year - 1,862 12,949 14,811

Transactions with owners in their capacity as owners:

Employee share options exercised 10 399 - - 399

Share-based payment expense – performance rights 7 - 484 - 484

Share-based payment expense – share options 7 - 263 - 263

Equity issued under dividend reinvestment plan 9, 10 551 - - 551

Dividends declared 9 - - (7,870) (7,870)

Total transactions with owners in their capacity as

owners 950 747 (7,870) (6,173)

Balance as at 31 December 2018 137,846 22,450 80,249 240,545



Consolidated Statement of Cash Flows For the Half-Year Ended 31 December 2019

Dec-19 Dec-18

Note $'000 $'000

Cash flows from operating activities

Receipts from customers 143,805 121,445

Payments to suppliers and employees (115,836) (100,997)

Interest received 69 49

Finance costs on borrowings (3,811) (645)

Finance costs on lease liabilities (617) -

Income tax paid (5,372) (3,536)

Net cash from operating activities 18,238 16,316

Cash flows from investing activities

Proceeds from sale of plant, equipment and leasehold improvements - 2

Payments for plant, equipment and leasehold improvements (2,807) (897)

Payment for capitalised development costs 6 (7,159) (5,272)

Net cash used in investing activities (9,966) (6,167)

Cash flows from financing activities

Proceeds from options exercised 10 345 399

Dividends paid, net of dividend re-investment 9 (4,904) (7,319)

Proceeds from borrowings 4,900 -

Repayment of borrowings (12,889) (4,659)

Repayment of lease liabilities (3,433) (52)

Net cash used in financing activities (15,981) (11,631)

Net decrease in cash and cash equivalents (7,709) (1,482)

Cash and cash equivalents at beginning of the half-year 38,288 23,245

Effects of exchange rate changes on cash and cash equivalents (653) 407

Cash and cash equivalents at end of the half-year 29,926 22,170


Notes to the Financial Statements Half-Year Ended 31 December 2019

1. Basis of preparation

The consolidated interim financial statements as at, and for, the half-year ended 31 December 2019 (“the half-year financial report”) comprise of the financial statements of the Group, being Hansen Technologies Limited (“the Company”) and its controlled entities. The Company is a company limited by shares, incorporated and domiciled in Australia.

The half-year financial report was authorised for issue by the Directors as at the date of the Directors' Report.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

(a) Basis of preparation of the half-year financial report

The half-year financial report has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. It does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual financial report for the year ended 30 June 2019 and any public announcements made by the Company during the half-year in accordance with any continuous disclosure obligations arising under the Corporations Act 2001.

The accounting policies adopted in the preparation of the half-year financial report are consistent with those adopted in the Group’s annual financial report for the year ended 30 June 2019, except for the impact of the adoption of AASB 16 Leases (AASB 16), effective as of 1 July 2019.

Note 2 to the half-year financial report discloses and describes the impact from the adoption of AASB 16.

Other Standards and amendments that are effective for the first time from 1 July 2019 and could be applicable to the Group are:

▪ AASB Interpretation 23 Uncertainty over Income Tax Treatments

▪ AASB 9 Prepayment Features with Negative Compensation (Amendments to AASB 9)

▪ AASB 128 Long-term Interests in Associates and Joint Ventures (Amendments to AASB 128)

▪ Annual Improvements to AASB 2015-2017 Cycle

▪ Plan Amendment, Curtailment or Settlement (Amendments to AASB 119) These Standards and amendments do not have a significant impact on the half-year financial report and therefore the disclosures have not been made. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

(b) Rounding amounts

The Group has applied the relief available under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and, accordingly the amounts in the half-year financial report and in the Directors’ Report have been rounded to the nearest thousand dollars, or in certain cases to the nearest dollar.

2. Leases

AASB 16 supersedes all previous lease accounting requirements under Australian Accounting Standards. The main impact on the Group is that AASB 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for most leases.

(a) Impact on adoption

The Group adopted AASB 16 using the modified retrospective method of adoption, where the cumulative effect of initially applying the standard is recognised as an adjustment to opening balances on 1 July 2019 (the transition date). Therefore, comparative figures for prior reporting periods are not restated.

In adopting AASB 16, the Group has also taken advantage of the following practical expedients:

▪ For each class of Right-of-use (ROU) asset, the Group uses a single discount rate to a portfolio of leases that have

the same lease term, same currency and located in the same jurisdiction.


2. Leases continued

(a) Impact on adoption continued

▪ The Group will rely on its assessments under the previous accounting standards to determine whether a ROU asset

is impaired. Accordingly, the Group has adjusted the ROU asset at transition date by the previously recognised

provision for onerous leases, amounting to $350,255.

▪ The Group has excluded initial direct costs from the measurement of the ROU asset on transition date.

▪ The Group has used hindsight and assumed all previous options to extend the lease have been exercised in

determining the lease term on transition date.

The Group has chosen not to apply the practical expedients for short-term leases and leases for which the assets are of low value.

The weighted average incremental borrowing rate applied to lease liabilities recognised at transition date was 4.7%.

The effect of adopting AASB 16 is as follows:

1 July 2019 transition

adjustment

$'000

Assets

Non-current assets

Right-of-use lease assets 26,278

Total assets impact 26,278

Liabilities

Current liabilities

Lease liabilities 5,731

Provisions (350)

Non-current liabilities

Lease liabilities 20,897

Total liabilities impact 26,278

Net assets impact -

Total equity impact -

Had AASB 16 not been adopted and the half-year financial report produced under previous guidance and accounting standards, the financial report for the 6-month period ended 31 December 2019 would have recorded a higher profit before tax of $303,000 and a higher net assets and equity of $348,000.

$'000

Consolidated statement of comprehensive income

Property and operating rental expenses (3,669)

Depreciation expense 3,357

Finance costs 615

Impact on statement of comprehensive income for the 6-month period ended 31 Dec 2019 303

Consolidated statement of financial position

Right-of-use lease assets (24,092)

Lease liabilities – current 5,732

Lease liabilities – non-current 19,058

Provisions (350)

Impact on net assets in the statement of financial position as at 31 Dec 2019 348

Consolidated statement of changes in equity

Reserves 45

Retained earnings 303

Impact on equity in the statement of financial position as at 31 Dec 2019 348


2. Leases continued

Adjustments were identified during the Group’s transition assessment exercise to account for the revised definition of a lease under AASB 16 including, amongst other considerations, whether there is a reasonable probability that the Group will exercise renewal or early termination options in its lease contracts.

Reconciliation with prior period operating lease commitments disclosure

$'000

Total future minimum rentals payable at the end of the prior period 30 June 2019 29,888

Transition assessment adjustments 1,640

Effect of discounting to present value (4,900)

Total lease liabilities at the date of initial application 26,628

(b) Lease accounting policies

The determination of whether an arrangement is (or contains) a lease depends on whether the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of an identified asset exists when the arrangement involves the use of an identified asset, when the Group obtains substantially all the economic benefits from the use of the asset, and when the Group has the right to direct the use of the asset.

On adoption of AASB 16, there is an increased focus on what is defined as the identified asset in the arrangement and which party has control over the use of, and the economic benefits derived from the use of, the underlying asset. Although the revised definition of a lease has not changed the assessment for many of the Group’s existing lease arrangements, for some of the Group’s IT service contracts, this resulted in additional embedded leases being identified for the first time.

The lease term is first determined with reference to the non-cancellable period of the lease contract, adjusted for any periods covered by options to extend the lease and/or to early terminate the lease if the Group is reasonably certain to exercise the options. Judgement is applied by the Group in determining whether the Group is reasonably certain to exercise the options. Prior to the adoption of AASB 16, the impact of renewal and early termination options to the lease term was not considered. This has resulted in changes to the lease term for some of our long-term property lease arrangements.

Lease liabilities are initially recognised and measured based on the total value of fixed and variable contractual lease payments over the lease term, including payments to extend or terminate the lease if the Group is reasonably certain to exercise the option to extend or terminate the lease respectively. The lease payments are discounted to present value based on the incremental borrowing rate implicit in the lease.

Lease payments on properties exclude service fees for maintenance, cleaning and other costs as these costs are separated as non-lease components. However, the Group has elected not to separate lease and non-lease components for leases of vehicles, office and IT equipment.

ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering the lease, less any lease incentives received.

ROU assets are depreciated on a straight-line basis over their earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Estimated useful lives of right-of-use assets are determined on the same basis as those of plant and equipment. The right-of-use asset is also periodically assessed for impairment losses and adjusted for certain remeasurements of the lease liability.

Prior to the adoption of AASB 16, the Group distinguished between operating and finance leases based on the economic substance of the agreement to reflect the risks and benefits incidental to ownership. Operating leases were recognised as an expense on a straight-line basis over the term of the lease. Most of the Group’s lease arrangements were operating leases. However, as AASB 16 makes no distinction between leases previously classified as either operating or finance leases, this results in the treatment of the Group’s operating leases being similar to finance leases and recognised on balance sheet for the first time.

(i) Presentation and disclosure

Depreciation on right-of-use assets is included as part of ‘Depreciation expense’ in the Consolidated Statement of Comprehensive Income, and interest expense on lease liabilities is presented separately as “Finance costs” on lease liabilities in the Statement of Comprehensive Income. Prior to the adoption of AASB 16, the Group’s operating lease expenses were presented in ‘Property and operating rental expenses’ in the Consolidated Statement of Comprehensive Income. The change to an interest and depreciation model has resulted in changes to the Group’s EBITDA and net profit after tax, the details of which are disclosed in Note 2(a).


2. Leases continued

(i) Presentation and disclosure

Right of use are disclosed separately on the Statement of Financial Position. Lease liabilities are presented in the Consolidated Statement of Financial Position as current or non-current depending on the timing of the settlement of contractual cash outflows. Prior to the adoption of AASB 16, the Group’s operating leases were off-balance sheet and disclosed separately as commitments.

As at 31 December 2019, ROU assets, Lease liabilities – current and non-current amounted to $24.1 million, $5.7 million and $19.1 million, respectively.

The repayment of the principal portion of lease payments is presented as part of financing activities in the Consolidated Statement of Cash Flows, and the interest portion is presented as part of operating activities. Prior to the adoption of AASB 16, all lease payments related to operating leases were presented as part of operating activities. Despite the presentation differences in the Consolidated Statement of Cash Flows, the adoption of AASB 16 does not change the Group’s net cash flows.

3. Segment information

(a) Description of segments

Management has determined the Group’s operating segments based on the reports reviewed by the CEO (the Chief Operating Decision Maker).

The operating segments are identified based on the types of services provided to the Group’s customers. Discrete financial information about each of these operating businesses is reported to the executive management team on at least a monthly basis.

Where operating segments meet the aggregation criteria, these are aggregated into reported segments. Operating segments are aggregated based on similar products and services provided to the same type of customers using the same distribution method.

Segment profits, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Inter-segment pricing is determined on an arm’s length basis and are eliminated on consolidation. There are no significant transactions between segments.

The Group has identified only one reportable segment as described in the table below. The “Other” category includes business units that do not qualify as an operating segment, as well as the operating segments which do not meet the disclosure requirements of a reportable segment, including IT Outsourcing and Customer Care services.

Reportable segment Description of segment

Billing Sale of billing applications and the provision of consulting services related to billing systems.

During the six months period ended 31 December 2019, Management has determined that certain costs, borrowings and their related finance costs are directly attributable to the Billing segment. Prior period segment information has been restated to reflect this.

(b) Segment information

Billing Other Total

6-months ended 31 Dec 2019 Note $'000 $'000 $'000

Segment revenue

Total segment revenue 5 139,459 4,872 144,331

Revenue from external customers 139,459 4,872 144,331

Segment result

Total segment result 12,138 213 12,351

Segment profit from core operations 12,138 213 12,351

6-months ended 31 Dec 2018 Note

Billing

$’000

Other

$’000

Total

$’000

Segment revenue

Total segment revenue 5 106,075 6,361 112,436

Revenue from external customers 106,075 6,361 112,436

Segment result

Total segment result 18,370 497 18,867

Segment profit from core operations 18,370 497 18,867


3. Segment information continued

(ii) Reconciliation of segment profit from core operations to the consolidated statement of comprehensive income

Dec-19 Dec-18

Note $'000 $'000

Segment profit from core operations 12,351 18,867

Interest revenue 69 49

Interest expense (112) (26)

Unallocated depreciation and amortisation (590) (397)

Other expense (2,629) (1,476)

Profit before income tax expense 9,089 17,017

Income tax expense (1,480) (4,068)

Profit after income tax expense for the half-year 7,609 12,949

(iii) Segment assets and liabilities

Billing Other Total

Total segment assets $'000 $'000 $'000

31 December 2019 498,314 21,027 519,341

30 June 2019 484,922 18,785 503,707

Total segment liabilities

31 December 2019 309,047 8,332 317,379

30 June 2019 290,907 4,846 295,753

4. Separately disclosed items

The Group has disclosed underlying EBITDA1 and underlying profit after tax, referring to the Group’s trading results adjusted for certain transactions during the year that are not representative of the Group’s regular business activities. The Group considers that these transactions are of such significance to understanding the ongoing results of the Group that the Group has elected to separately identify these transactions to determine an ongoing result to enable a 'like-for-like' comparison. These items are described as 'separately disclosed items' throughout this Financial Report.

2019 2018

6-months ended 31 Dec $'000 $'000

Decrease to profit before tax Restructuring and one-off costs incurred in Sigma Systems (2,264) -

(2,264) -

Included in the Group’s results for the six-months ended 31 December 2019 are $2,264,000 of restructuring and one-off costs related to redundancy, retention payments and associated post-acquisition costs. These costs are included within 'Employee benefit expenses' and ‘Other expenses’ in the Group’s consolidated statement of comprehensive income.

Reconciliation with Group statutory measures

2019 2018

6-months ended 31 Dec $'000 $'000

Underlying EBITDA excluding AASB 16 impact 34,055 28,451

Less separately disclosed items (2,264) -

Add impact of adoption of AASB 16 3,669 -

EBITDA1 35,460 28,451

Underlying profit after tax 9,273 12,949

Less separately disclosed items (2,264) -

Tax effect of separately disclosed items 600 -

Net profit after tax 7,609 12,949

1. EBITDA is a non-IFRS term, defined as earnings before interest, tax, depreciation and amortisation, and excluding net foreign exchange gains (losses).


5. Revenue

(a) Disaggregation of revenue from contracts with customers

Set out below is the disaggregation of the Group’s revenue from contracts with customers:

Billing Other Total

6-months ended 31 Dec 2019 $'000 $'000 $'000

Types of goods and services

Licence, support and maintenance 83,104 2,423 85,527

Services 55,587 2,379 57,966

Hardware and software sales 305 - 305

Other revenue 463 70 533

Total revenue from contracts with customers 139,459 4,872 144,331

Revenue by market vertical

Utilities 70,331 2,364 72,695

Communications 69,128 - 69,128

Other - 2,508 2,508


Revenue by geographic segment

APAC 26,010 2,508 28,518

Americas 40,631 2,364 42,995

EMEA 72,818 - 72,818


Timing of revenue recognition

Goods and services transferred at a point in time 22,220 71 22,291

Services transferred over time 117,239 4,801 122,040



5. Revenue continued

Billing Other Total

6-months ended 31 Dec 2018 $'000 $'000 $'000

Types of goods and services

Licence, support and maintenance 68,398 3,150 71,548

Services 36,813 3,046 39,859

Hardware and software sales 345 - 345

Other revenue 519 165 684


Revenue by market vertical

Utilities 73,369 3,133 76,502

Communications 32,706 - 32,706

Other - 3,228 3,228


Revenue by geographic segment

APAC 21,499 3,228 24,727

Americas 23,517 3,133 26,650

EMEA 61,059 - 61,059


Timing of revenue recognition

Goods and services transferred at a point in time 17,934 166 18,100

Services transferred over time 88,141 6,195 94,336


(b) Contract balances

Dec-19 Jun-19

$'000 $'000

Accrued revenue 26,383 27,817

Unearned revenue 34,026 27,069

The accrued revenue primarily relates to the Group’s rights to consideration on software licences deployed on contract

inception but have yet to be billed to the customer. Accrued revenue is transferred to receivables when the rights

become unconditional. This usually occurs when the Group issues an invoice to the customer. Unearned revenue

primarily relates to advance consideration received from customers representing support and maintenance services.


6. Intangible assets

Goodwill

Technology and other

intangibles at cost

Software development

at cost Total

$'000 $'000 $'000 $'000

Cost

At 30 June 2019 223,547 196,264 65,583 485,394

Additions - - 7,159 7,159

Net foreign currency movements arising from

foreign operations (3,818) (1,669) (3) (5,490)

At 31 December 2019 219,729 194,595 72,739 487,063

Accumulated amortisation and impairment

At 30 June 2019 (1,595) (41,466) (39,551) (82,612)

Amortisation charge - (11,134) (4,158) (15,292)

Net foreign currency movements arising from

foreign operations (7) 98 - 91

At 31 December 2019 (1,602) (52,502) (43,709) (97,813)

Net book amount

At 30 June 2019 221,952 154,798 26,032 402,782

At 31 December 2019 218,127 142,093 29,030 389,250

7. Share-based payments

On 2 September 2019, 607,247 performance rights were granted to senior executives under the Company’s Employee Performance Rights Plan. This amount includes 179,954 rights issued to the CEO following approval obtained at the Company’s Annual General Meeting on 21 November 2019. 119,969 rights will vest if targeted performance measures are achieved and an additional 59,985 will vest based on overachievement of targets.

Performance rights issued as part of the long-term investment plan are subject to a relative total shareholder return hurdle (TSR performance right) and earnings per share hurdle (EPS performance right). Additionally, the Group has issued performance rights as part of the short-term incentive plan which are subject to a two-year deferral period as well as financial (revenue and EBITDA) and strategic hurdles. The assessed fair value at grant date of performance rights granted was $2.55 per TSR performance right, $3.11 per EPS performance right and $3.11 per deferred equity.

The fair value of TSR performance rights at grant date is independently determined using a Monte Carlo simulation option pricing model.

The fair value of EPS performance rights and deferred equity at grant date is determined using Black-Scholes option pricing model.

The models take into account the term of the performance rights, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the performance rights and the correlations and volatilities of the peer group companies.

The model inputs for the performance rights granted during the six months ended 31 December 2019 included:

• grant date: 2 September 2019(1)

• expected vesting date: 30 June 2022

• measurement period: 1 July 2019 to 30 June 2022

• share price at grant date: $3.28

• expected price volatility of the company’s shares: 35%

• expected dividend yield: 1.88%

• risk-free interest rate: 0.68%

(1) The issue of 179,954 of these rights to the CEO was approved by shareholders at the Company’s Annual General Meeting on 21 November 2019. Any differences in the fair value of the performance rights between the original grant date by the Board and the date of shareholder approval is not material to remuneration awarded.

The expected price volatility is based on the historic volatility (based on the life of the performance rights), adjusted for any expected changes to future volatility due to publicly available information.

For the six months ended 31 December 2019, the Group has recognised $758,892 of share-based payment expense, presented as part of employee benefit expenses in the statement of comprehensive income (six months ended 31 December 2018: $747,194).


8. Borrowings

Dec-19 Jun-19

$'000 $'000

Current Secured

Bank overdraft - 134

- 134

Non-current

Secured

Term facility – gross borrowings 183,071 189,543

Term facility – prepaid borrowing costs (2,672) (3,216)

180,399 186,327

The Group secured an A$225,000,000 syndicated multi-currency facility with its external financiers to fund the acquisition of Sigma Systems and to provide additional funding for general corporate and working capital purposes. The facility expires on 30 April 2022 and will be subject to renewal upon negotiation with its external financiers.

The facility is secured by 75% of Group assets. As at 31 December 2019 the remaining unutilised portion of the facility is A$41,929,000.

9. Dividends

A regular dividend of 3 cents per share has been declared. This interim dividend of 3 cents per share, partially franked, was announced to the market on 28 February 2020. The amount declared has not been recognised as a liability in the accounts of Hansen Technologies Limited as at 31 December 2019.

Dec-19 Dec-18

$'000 $'000

Dividends paid during the half-year (net of dividend re-investment):

3 cents per share final dividend paid 26 September 2019(1) – partially franked 4,904

4 cents per share final dividend paid 27 September 2018(2) – fully franked 7,319

4,904 7,319

Proposed dividend not recognised at the end of the half-year:

3 cents per share interim dividend (3 cents partially franked)(3)(4) 5,939

3 cents per share interim dividend (3 cents fully franked)(4) 5,912 (1) The final dividend paid of 3 cents per share franked to 2.6 cents, comprised of a regular dividend of 3 cents per share

(2) The final dividend paid of 4 cents per share, franked to 4 cents, comprised of a regular dividend of 3 cents per share, together with a special dividend of 1 cent per share. (3) The proposed interim dividend of 3 cents per share franked to 1.59 cents, will comprise of a regular dividend of 3 cents per share

(4) Proposed dividends are stated before dividend reinvestment, which reduces the Group’s amounts of dividends payable.


10. Contributed capital

(a) Issued and paid up capital

Dec-19 Dec-19 Jun-19 Jun-19

No. $'000 No. $'000

Ordinary shares, fully paid 197,973,817 140,117 197,399,653 138,746

(b) Movements in shares on issue

Half-year ended 31 December 2019 No. of Shares $'000

Balance at beginning of the half-year 197,399,653 138,746

Shares issued under dividend reinvestment plan 309,164 1,026

Options exercised under employee share plan 265,000 345

Balance at end of the half-year 197,973,817 140,117

11. Subsequent Events

Please refer to note 9 for the interim dividend recommended by the Directors, to be paid on 26 March 2020.

There has been no other matter or circumstance, which has arisen since 31 December 2019 that has significantly affected or may significantly affect:

(i) the operations, in financial years subsequent to 31 December 2019, of the Group;

(ii) the results of those operations; or

(iii) the state of affairs, in financial years subsequent to 31 December 2019, of the Group.


Directors’ Declaration

The Directors declare that the financial statements and notes set out on pages 6 to 19 are in accordance with the Corporations Act 2001, including:

(a) complying with Accounting Standards, in particular AASB 134 Interim Financial Reporting, and the Corporations Regulations 2001, and other mandatory professional reporting requirements; and

(b) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2019 and of its performance for the half-year ended on that date.

In the Directors’ opinion, there are reasonable grounds to believe that Hansen Technologies Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors, pursuant to section 303(5)(a) of the Corporations Act 2001.

David Trude Andrew Hansen

Director Director

Melbourne

28 February 2020

INDEPENDENT AUDITOR’S REVIEW REPORTTo the Members of Hansen Technologies Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Hansen Technologies Limited (the Company) and its Controlled Entities (the Group) which comprises the consolidated statement of financial position as at 31 December 2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Group comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Hansen Technologies Ltd and Controlled Entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Hansen Technologies Ltd and Controlled Entities, would be in the same terms if given to the directors as at the time of this auditor’s report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Hansen Technologies Ltd and Controlled Entities is not in accordance with the Corporations Act 2001 including:

(a) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performancefor the half-year ended on that date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations2001.

RSM AUSTRALIA PARTNERS

J S CROALL Partner

Dated: 28 February 2020 Melbourne, Victoria

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hansen technologies limited

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